Jeffrey K. Skilling, the former chief executive of Enron whose lies contributed to the sudden collapse of the energy company in one of the country’s most high-profile cases of corporate fraud, was released from federal custody on Thursday after serving more than 12 years in prison, the federal authorities said. Mr. Skilling, 65, was released from a halfway house in Texas, his final stop in the federal prison system after being held at a prison camp in Alabama and a prison in Colorado, the Federal Bureau of Prisons said on Friday. A lawyer for Mr. Skilling did not respond to a message seeking comment. Mr. Skilling was one of several Enron leaders who guided the company through a spectacular rise in the 1990s, as it evolved from a sleepy pipeline operator into one of the world’s dominant energy companies by reshaping the way natural gas and electricity were bought and sold. He was later convicted for his leading role in a complex fraud and conspiracy scheme that led to the company’s stunning fall, which culminated in one of the largest corporate bankruptcies in American history on Dec. 2, 2001. Mr. Skilling had abruptly quit four months earlier, in August 2001, after less than a year as chief executive. His resignation stunned Wall Street analysts and raised suspicions, despite his assurances at the time that his departure had “nothing to do with Enron.” But in private, Enron executives knew that its accounting improprieties, which were used to hide financial losses, would soon unravel for the world to see. In October of that year, Enron announced a $600 million loss in the latest financial quarter and a $1.2 billion reduction in shareholder equity, almost immediately prompting the Securities and Exchange Commission to open an investigation into the company. It was only a matter of time before the company would be revealed as a house of cards and Enron’s crooked E logo would become a symbol of corporate shame. The fall of Enron cost shareholders billions of dollars and its employees their retirement savings. Its demise ushered in a wave of prosecutions that rooted out accounting fraud at other companies like WorldCom, HealthSouth and Adelphia Communications. Along with Kenneth L. Lay, Enron’s founder and chairman, Mr. Skilling was convicted on fraud and conspiracy charges in 2006 after a 56-day trial. Specifically, Mr. Skilling was convicted of 18 counts of fraud and conspiracy and one count of insider trading for his central role in the accounting schemes that masked Enron’s debts and weak finances from shareholders and regulators. Mr. Lay was found guilty on six counts of fraud and conspiracy and four counts of bank fraud. He died about a month after the trial, and his conviction was vacated. Separately, Andrew S. Fastow, the former chief financial officer who helped construct Enron’s fraud scheme, pleaded guilty in 2004 to fraud and stealing from the company. A judge reduced his initial prison sentence to six years from 10 years because he helped federal prosecutors with the convictions of Mr. Skilling and Mr. Lay. Of the group, Mr. Skilling was given the harshest punishment: He was initially sentenced to more than 24 years in prison, but that term was later reduced to 14 years in part because of a mistake made by a judge in interpreting the federal sentencing guidelines. In exchange for his reduced sentence, Mr. Skilling gave up about $42 million, all of which was to be distributed to victims of Enron’s fraud. During Mr. Skilling’s time in prison, his parents and his 20-year-old son have died.
Skilling, a graduate of Harvard Business School, joined Enron in 1990 after having advised the company as an outside consultant employed by McKinsey & Co. He served as Enron's president and chief operating officer -- helping turn the company from an old-style pipeline business into a trading giant -- before becoming CEO in early 2001, succeeding Lay. But Skilling resigned in August of the same year, saying his departure was related to unspecified family matters. By that time, the company's stock was off 49% from the start of the year. Status: Judge Lake dropped three counts against Skilling, who now faces 28 counts of fraud, conspiracy, insider trading and lying to auditors. He has pleaded not guilty. The Case:The prosecution says Skilling led a multiyear conspiracy to pump up Enron's financial statements. The defense argues that, like Lay, Skilling relied on his subordinates and wasn't doing anything criminal. • One Year Later, Possible Charges Hang Over a Former Enron Chief 8/14/2002
Enron's former head of investor relations, Mr. Koenig worked with top executives on quarterly conference calls with analysts. He prepared the company's earnings statements and worked with top executives on conference calls with analysts. Earlier this month he revised his plea agreement to attribute to Mr. Skilling a statement that Mr. Koenig originally said he made on a 2001 call to mislead analysts about why Enron folded its money-losing retail energy unit into the company's profitable trading unit. Status: Koenig pleaded guilty in August 2004 to one count of aiding and abetting securities fraud and has agreed to cooperate with prosecutors. His sentencing date is May 19. Testimony: Koenig testified that Enron's earnings were sometimes changed at the last minute to keep Wall Street happy and that both Skilling and Lay knew about it. He also said that the executives either made or approved of misleading statements to the public about problems at Enron's retail-energy and broadband units. • Enron Trial Pace Slowed by Defense's Efforts 2/13/2006
Ken Rice was a close ally of Jeff Skilling and part of Enron's old guard of dealmakers. A former Enron trader, Rice was tapped in the late 1990s to be co-head of the company's money-losing broadband unit, which never lived up to its hype. He testified during the 2005 trial of five former broadband executives that he, Mr. Skilling and others lied to investors and analysts about capabilities of Enron's broadband network to inflate company stock. A videotape of Mr. Skilling's remarks to analysts about the broadband unit in January 2000 showed the former CEO alternated between what the network could do at that time and what it would do later. The distinction could be critical regarding broadband-related charges against him. Status: Rice pleaded guilty in July 2004 to one count of securities fraud and forfeited $13.7 million in cash and property. Sentencing: scheduled for Dec. 4, 2006. Testimony: Rice testified that Skilling told analysts that the broadband unit could survive even when it was flailing. • On Deck: Veteran of Earlier Enron Trial 2/14/2006
Timothy Belden ran Enron's Western power-trading desk in Portland, Ore., in 2000 and 2001. Status: Pleaded guilty in October 2002 to conspiracy for manipulating California's energy market. Sentencing: No date set. Testimony: Belden said that California's "dysfunctional" market in the aftermath of electricity deregulation left it ripe for high prices. He said Enron pocketed nearly $1 billion over nine months in late 2000 and the first half of 2001. His testimony may be best known for drawing this distinction: price volatility -- not volume increases -- was the primary factor in Enron's huge electricity-trading profits. On cross-examination, Belden frequently sparred with defense lawyers, refusing to accept the defense's argument that trading profits were due to unit volumes.
David Delainey rose swiftly through the ranks at Enron, leading Enron's profitable wholesale energy-trading unit before being tapped to head the retail energy-services unit. Status: Pleaded guilty to insider trading. Sentencing: July 10. Testimony: Delainey said the wholesale energy-trading unit built reserves and used them to "smooth" its volatile results. Enron misled outsiders about the sizeable risks in its trading operations, he said, adding: "we tended to be pretty fast and loose with the rules, generally." As for the retail energy-services unit, Delainey testified that, contrary to management claims that it was one of Enron's growth areas, the unit was "a basket case" when he was handed the reins in 2001. He described a meeting with Skilling and others in which he felt pressure from his bosses to go along with a plan to hide retail losses by transferring the stressed unit into the healthy wholesale business. "We lied to shareholders, employees, the public," Delainey testified. "It was just plain wrong." • Skilling Attorney Challenges Delainey Credibility 3/02/2006
Fastow was hired at Enron by Skilling in 1990, and became CFO in March 1998. Over the next several years, Fastow created off-balance-sheet partnerships that put him at the center of the firm's most controversial deals. He was forced out in October 2001, just before the company's collapse. Status: In January 2004, he pleaded guilty to two criminal counts -- of a 98-count indictment -- and agreed to a 10-year sentence in return for his cooperation in future trials. Sentencing: June 13. His wife, Lea, completed a one-year prison sentence in July 2005 for filing a false tax return. The government has seized nearly $30 million from the Fastows. Testimony: Fastow was on the stand for four days. He testified that he ran partnerships that hid huge losses at Enron and boosted earnings, with Skilling's blessing. Of those deals, he quoted Skilling as saying, "Get me as much of that juice as you can." He also testified about a master list, known as "global galactic," that he once wrote to keep track of the deals. Day two of his testimony put the focus squarely on Lay. Fastow testified that Lay knew about Enron's financial woes in 2001, just days before he gave an interview that said the company was in its best shape ever. On cross-examination, he admitted to lying to Lay over the money he has admitted stealing from the company. (Read excerpts.)
During her time at Enron Global Finance, Watkins reported to Fastow. Before coming to Enron, she had been an auditor Arthur Andersen LLP, Enron's auditor. She is often referred to as a whistleblower, but that term is incorrectly used on her, as she flagged her concerns to Enron executives and not authorities outside the company. Status: Never charged with a crime. Testimony: Watkins testified about the infamous 2001 memo to Lay in which she warned him about suspicious deals that could lead Enron to "implode in a wave of accounting scandals," and then a subsequent meeting with Lay. "He seemed surprised that these things could be problematic," Watkins told jurors, adding that he winced when she discussed certain concerns. She testified about the off-balance-sheet financial structures known as the Raptors, which carried loads of debt and were backed by Enron stock, saying, "Accounting just doesn't get that creative." • Watkins Recounts Warning to Lay 3/16/2006
Ben Glisan Jr., the prosecution's final witness, was Enron's former Treasurer and chief architect of the Raptors. He worked closely with Fastow, but also was high up enough to have regular contact with Lay and Skilling, which prosecutors hope will secure their case that Lay and Skilling knew what was going on at the company. The Raptors were four LJM2-related entities created in 2000 that were backed by Enron stock and wrongly treated as independent of Enron. Glisan has been described as a popular figure at Enron; Skilling once said he had the reputation of a "boy scout." Status: Glisan was the first Enron executive to go to prison. He is currently serving a five-year prison term for conspiring to falsify financial results, but is being allowed to stay at home for the duration of his testimony in the Lay-Skilling trial. Testimony: Outside the jury's presence, Glisan invoked the Fifth Amendment when asked if he committed any other crimes while at Enron. Glisan then testified that Enron's financial condition was "weak" on the day that Skilling resigned. The prosecution then played tapes of Lay and Skilling from that same day, offering an upbeat assessment of the company's condition and outlook. When asked if Lay and Skilling were aware of the problems, Glisan replied, "Yes, they were." (Read excerpts.) • Glisan Testifies that Lay, Skilling Misled Investors 3/22/2006
Skilling served as Enron's president and operating chief -- helping turn the company from an old-style pipeline business into a trading giant -- before becoming CEO in early 2001, succeeding Lay. Skilling resigned in August of the same year. Status: Judge Lake dropped three counts against Skilling, who now faces 28 counts of fraud, conspiracy, insider trading and lying to auditors. He has pleaded not guilty. Testimony: Skilling focused on Enron's good years, saying that there was no reason to break the law or mislead investors because the company was doing well. He denied masterminding conspiracy to manipulate earnings at Enron and picked off several key allegations by former Enron CFO Andrew Fastow. Skilling said he never said "Get me as much of that juice as you can," referring to Enron side deals, as Fastow testified. He also said that, at the time he quit Enron, he had no idea that the company would soon collapse and that he doesn't remember trying to sell 200,000 shares at that time. "I will fight those charges until the day I die," Skilling told jurors. "I am absolutely innocent." (Read more excerpts.)
Lay became CEO of Enron after the 1985 merger of Houston Natural Gas and InterNorth; the resulting company was renamed Enron. He served as CEO for 15 years before stepping aside to let Skilling take the helm in early 2001. When Skilling resigned, Lay returned to the CEO post. Status: Judge Lake dropped one of the charges against Lay, who now faces six counts of fraud and conspiracy. He has pleaded not guilty. He also faces a separate trial on bank-fraud charges related to his Enron stockholdings. Testimony: Lay sternly denied that he had broken the law and described as "ludicrous" the notion that he took the reins of conspiracy back from Skilling. He described the allegations as "the American nightmare" and said, "I'm anxious to tell the truth about Enron." His argument for Enron's true demise is as follows: The market's drop after the dot-com bubble burst coupled with weak sentiment following the Sept. 11, 2001 terrorist attacks made conditions ripe for shortsellers -- using journalists like the Journal's John Emshwiller and Rebecca Smith -- to take down Enron. "In the end, Enron's failure was caused by a classic run on the bank," Lay testified. (Read more excerpts.)
Causey came to Enron from Arthur Andersen, the company later accused of impeding the investigation into Enron's books. He was fired from Enron in February 2002 for failing to adequately look out for Enron's interests when the energy giant made deals with partnerships set up by Fastow. Fastow had agreed to provide details about Causey as part of his plea deal. Causey was charged with more than 30 counts of conspiracy, wire and securities fraud, money laundering, making false statements and insider trading. In late December, he pleaded guilty to one count of securities fraud and forfeited $1.25 million to the government. Under the deal, he faces seven years in prison, with a chance for a reduction to five years if he assists in the investigation. His sentencing is scheduled for April 21. Before his plea deal, the prosecution described him as one of the top numbers men in the conspiracy. The defense argued outside lawyers and auditors had vetted his activities. • Enron's Causey Steps Into the Trial Limelight 12/23/2005
Berkowitz was named director of the government's Enron Task Force in July 2005; he joined the group in late 2003 on assignment from the U.S. Attorney's Office for the Northern District of Illinois, where he served as a deputy chief in the office's criminal division. During his five years with the U.S. Attorney's Office in Chicago, Berkowitz handled a number of significant prosecutions, including a securities fraud case against officers of Anicom, Inc., a Chicago-based corporation, and a capital murder case involving the murder of a federal witness. Before joining the Justice Department, Berkowitz worked at the law firm of Katten Muchin Zavis, where he concentrated in white collar criminal defense and securities fraud litigation. Berkowitz graduated in 1989 from Tulane University, where he was first in his class, and from Harvard Law School in 1992.
Hueston has been a member of the government's Enron Task Force since January 2004. On detail from the U.S. Attorney's Office in California's Central District, Hueston was the chief of the Southern Division, based in in Orange County, Calif. While serving as chief, Hueston prosecuted a variety of cases that included a 10-defendant political corruption case relating to the award of $60 million in waste-disposal contracts, a $20 million mail-fraud and money-laundering scheme perpetrated by the CFO of a major international corporation, and a case involving the first elected official extortion conspiracy prosecuted in California. Hueston joined the Justice Department from the firm of O'Melveny & Myers in 1994. He graduated from Dartmouth College in 1986 and from Yale Law School in 1991. While at Yale, he served as a notes editor on the Yale Law Journal.
Ruemmler joined the Enron Task Force in 2003 and was named deputy director in July 2005. She is on assignment from the U.S. Attorney's Office for the District of Columbia, where she has worked since 2001. Ruemmler was lead prosecutor in the so-called "Nigerian barge" trial, in which five people were convicted and one acquitted in connection with a business deal between Enron and Merrill Lynch. Before joining the U.S. Attorney's office, she worked in the Washington, D.C., office of Latham & Watkins, where she practiced criminal and civil litigation. She served as associate counsel to President Clinton during his administration, handling a wide range of investigative matters. Before that, Ruemmler worked at Zuckerman Spaeder LLP in Washington, practicing white-collar criminal defense. She received a bachelor's in English in 1993 from the University of Washington in Seattle and her law degree from Georgetown University Law Center in 1996.
Sixty-one-year-old Judge Simeon "Sim" Lake, based in Houston, will be overseeing the trial. White-collar crime is a familiar subject for Lake. In March 2004, he sentenced former Dynegy finance executive Jamie Olis to 24 years in prison for his role in an accounting fraud scheme. The sentence was thrown out in late 2005, when an appeals court ruled the shareholder losses used to calculate the sentence under federal guidelines may have been overstated. Lake is expected to re-sentence Olis. A former environmental attorney with the firm of Fulbright & Jaworski, he was appointed to the district court by President Reagan in 1988. He earned his law degree from the University of Texas law school in 1969. He was one of the top-rated judges in a Houston Bar Association poll of local lawyers' judicial preferences, getting high marks for courteousness, fairness, efficiency and preparedness.
One of the 16 jurors hearing the fraud and conspiracy case of former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling labeled "obscene" the kinds of salaries and bonuses the defendants received. Another said the men are "suspect" in the collapse of a company due to greed and mismanagement. A grandmother and third-grade teacher said she thought that Lay must feel overwhelmed because he's a role model for his children and grandchildren. And another woman who does internal audits for an oil-services company -- and also volunteers for a Houston-area police department -- says the trial's evidence will show whether a crime was committed. Such are snippets of the views expressed by the six men and 10 women in the jury box, according to a transcript of last week's jury selection. Twelve of the 16 jurors will decide whether Enron's former top titans participated in a massive fraud. Of the 16, four men and eight women are the decision-makers. The remaining two women and two men are alternates. More. Source: Associated Press
The 52-year-old Mr. Petrocelli grew up in New Jersey and earned an undergraduate degree in economics from the University of California, Los Angeles. He obtained his law degree at night from Los Angeles's Southwestern University, where he graduated first in his class and was editor of the law review. A partner in the big, Los Angeles-based firm of O'Melveny & Myers LLP, Mr. Petrocelli is a business litigator with no previous criminal trial experience. He attracted widespread media coverage in the 1990s when he sued O.J. Simpson in a wrongful death civil suit on behalf of the Goldman family, whose son Ron had been murdered. The civil trial, which came after Mr. Simpson had been acquitted on criminal charges of murdering his ex-wife and Mr. Goldman, resulted in a $33.5 million judgment for the plaintiffs. • Audacious Defense: Enron's Moves Were Legal 1/20/2006
Born in Galveston, Texas, the 65-year-old Mr. Ramsey earned his bachelor's degree and law degree from Southern Methodist University. A veteran criminal defense attorney in the Houston area, he was named criminal defense lawyer of the year by the criminal justice section of the Texas state bar in 1999. Additionally, the Houston Press named Mr. Ramsey the city's best criminal defense attorney for 2004. In 2003, he helped win the acquittal of Robert Durst, scion of a wealthy New York real-estate family, on a charge of murdering and dismembering a man. Mr. Durst claimed self-defense. • For Mike Ramsey, Enron's Ken Lay Is Another Colorful Client 7/14/2004 Sources: The Wall Street Journal, Associated Press |
When did kenneth lay stop being ceo of enron
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